Half-year Report
05/12/2024 07:00
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RNS Number : 8499O STS Global Income & Growth Trust 05 December 2024
To: RNS
From: STS Global Income & Growth Trust plc
LEI: 549300UZ1Y7PPQYJGE19
Date: 5 December 2024
Half-year financial report
Six months to 30 September 2024
FINANCIAL HIGHLIGHTS
Total return^ Six months ended Six months ended
(including reinvested dividends) 30 September 2024 30 September 2023
% %
Net asset value per share 3.8 0.7
Lipper Global - Equity Global Income Index 2.5 0.5
Share price 3.9 3.2
Key data As at As at
30 September 2024 31 March 2024
Net asset value per share (cum income)(˄) 230.82p 223.71p
Net asset value per share (ex income)(˄) 227.02p 222.86p
Share price 227.00p 220.00p
Discount (˄) (1.65%) (1.66%)
Net assets £295,715,000 £314,353,000
Income Six months ended Six months ended
30 September 2024 30 September 2023
Revenue per share 3.66p 3.31p
Dividend per share 3.17p 3.05p
^ For details of all Alternative Performance Measures refer to the half-year
report.
INTERIM MANAGEMENT REPORT
Chairman's statement
Introduction
It is pleasing to report on a period of positive returns for your Company over
the six-month period to 30 September 2024. During this period, the net asset
value total return reached +3.8%, outperforming the +2.5% return of our
benchmark, the Lipper Global - Equity Global Income Index.
These returns have been achieved against a background in which equity markets
globally have had to deal with a heightened level of geopolitical risk in
Ukraine and in the Middle East, offset by clear evidence that the interest
rate cycle has peaked in many developed economies. There are signs that
inflation rates, while still variable, have passed their peak levels.
There has been much for markets to consider, including the recent UK Budget
and US election. More recently, a sharp rise in government bond yields in the
US and UK might indicate that there is no consensus as to how the next part of
the cycle might play out.
The US equity market has continued to deliver a strong performance and has
also continued to do so with aggregate returns still driven by a small cohort
of companies, by number, but which represent a significant weight within the
S&P 500 Index (the so called "Magnificent Seven" mega-cap tech-related
stocks).
Revenue and dividends
The revenue position for the period reflects the enlarged asset base of the
Company following the merger with Troy Income & Growth Trust plc ('TIGT')
in March of this year. Consequently, the total revenue for the period of
£5.8m was significantly greater than the £4.0m earned in the period to 30
September 2023. Total investments at the period end were £309.0m, compared
with £219.8m at 30 September 2023.
The Board declared a first interim dividend of 1.586 pence per ordinary share,
which represented a 4% increase on the equivalent dividend for the prior year.
Barring unforeseen circumstances, it is the Board's intention to increase the
total dividend for the year to 31 March 2025 by 4% and
consequently, a second interim dividend of 1.586p has been declared. The
second interim dividend will be paid on 17 January 2025 to shareholders on the
register on 20 December 2024. The ex-dividend date will be 19 December 2024.
There are a number of conflicting factors that can determine the revenue
outcome for the Company in any given period, the principal one being the
timing and level of dividend payments by underlying investee companies.
However, and as discussed previously, the average Sterling/US Dollar exchange
rate for a fiscal period is also of critical importance.
In the period under review, 40% of your Company's total revenue was
denominated in US Dollars. Of this, 34% consisted of dividends paid by US
based companies and 6% was from non-US based companies that choose to account
and pay dividends in US Dollars - examples being Diageo and Accenture.
In the six months under review, the Sterling/US Dollar exchange rate moved
from 1.26 to 1.34 but subsequently Sterling has weakened against the US
Dollar, owing to recent reductions in UK short term interest rates and the
view that the likely economic policies of the new US President may give the
Federal Reserve less scope to reduce rates than was previously expected.
The Board will seek to mitigate the effect of exchange rate variation by using
revenue reserves and if necessary capital reserves to supplement revenue
earnings in periods of adverse currency movement. The objective being to pay a
consistently rising dividend over time.
Discount management
Your Board has adopted a discount control mechanism that has the objective of
seeking to ensure that the Company's shares trade at a value close to their
underlying net asset value on a consistent basis. Shares will be bought in
when there are surplus net sellers in the market and shares may
be issued in periods of net demand.
In the six-month period under review, no shares were issued and 12.4m were
purchased at an average discount of 1.3%. This amount represents 8.8% of the
shares in issue at the start of the period and enhanced the net asset value of
the Company by £338,000. Such a significant level of buy-in is consistent
with recent trends in the investment trust and open-ended investment company
sectors. Both sectors have seen substantial outflows of funds recently, for a
variety of reasons, not least the anticipation of changes to the rates of
capital gains taxes in the recent Budget.
There are also several other factors which are affecting the demand for shares
of investment companies. The wealth management sector has seen considerable
consolidation in recent years and as a result some management houses now have
substantially greater assets under management than before the consolidation.
This has changed the role that investment trusts can play in their client
portfolios and has led to some of these managers being net sellers of the
sector. Your Company has been affected by such activity.
The buy-in has achieved its objective and the average share price discount
over the period was 1.4%.
At the AGM in June 2024 the Company renewed its authority to buy in up to
14.99% of its then issued share capital. In the six months to 30 September
2024 more than half of this authority was used - 8.8% of the share capital was
purchased from selling shareholders.
In order to maintain the maximum flexibility and allow share purchases to
continue to meet selling demand, the Board is now seeking to renew its buyback
authority. A General Meeting will be held on 8 January 2025 where a resolution
will be proposed to renew the buy back authority to 14.99% of the issued share
capital. The Board encourages shareholders to support this resolution.
Board considerations
Following the TIGT merger in March, the Board briefly expanded to eight
members. As planned, two directors retired at the AGM in June 2024, leaving a
current Board of six.
At the 2025 AGM, I will retire after nine years of service on the Board, in
line with corporate governance best practices. I am pleased to announce that
it is intended that Sarah Harvey will succeed me as Chair, subject to her
re-election. Sarah has served as a Board member since 2018 and as Senior
Independent Director since 2022. Sarah has also served as Chair of the
Marketing and Communications Committee, has extensive knowledge of the Company
and brings vast experience from her broader career.
Outlook
I am pleased that on current expectations your Company will produce a real
increase in the dividend paid to shareholders in the current financial year.
This is a testament to the quality and underlying growth and profitability of
the companies in the portfolio - characteristics actively sought by your
Managers.
There are several challenges to equity markets at present including rising
bond yields and electoral and geopolitical concerns. Indeed, Donald Trump's
recent election success resulted in a continued rise in bond yields, a
strengthening of the US Dollar and a positive reaction in the US equity
markets. The portfolio is managed in a dynamic manner and the Board is
confident that the Managers can take advantage of whatever opportunities lie
ahead.
John Evans
Chairman
4 December 2024
Manager's review
The Company made progress in the first half of the year, advancing by +3.8% in
net asset value terms relative to a return of +2.5% for the comparison index.
Unilever was a strong performer. After a long period of lacklustre returns
investors are increasingly convinced that the business is being re-invigorated
by the new leadership of CEO, Hein Schumacher and CFO, Fernando Fernandez. We
have met both executives and share this enthusiasm. A greater willingness to
focus the business on the best products and brands, as well as a
simplification of incentives while bearing down on costs, should in time lead
to better growth and stronger margins. The rise in the share price has
anticipated some of this improvement but we believe this operating momentum
can continue for some years.
We have had a long-term investment in US listed payroll and human resources
software business Paychex. The company delivered a strong performance in
recent months following a period of consolidation in the share price despite
consistent results and growth in underlying free cash flow. They have also
rewarded investors with strong dividend growth which has averaged 9.65% per
annum over the last 5 years. The company remains a core holding.
Philip Morris was the largest contributor to our performance, rising by 34.8%
during the half year. The company has done an excellent job of leading the
industry in its transition away from combustible products to much less harmful
alternatives. They have established their heat-not-burn product, IQOS, as the
leading premium product in the category globally. This leadership has been
bolstered by the acquisition of Swedish Match which brought with it the
leading modern oral brand Zyn. Recent results have been strong, leading
investors to ascribe a premium valuation to
the business relative to peers.
British American Tobacco ('BAT') also appreciated in the period under review.
Although the strategy pursued by the business has lacked the clarity and
vision of the leadership team at Philip Morris, BAT should also benefit, with
a lag, from many of the same trends that are driving the Philip Morris share
price. This second-mover status is more than reflected in the very low
valuation of the shares. We expect the company to make further progress in its
non-combustible business as well as show some improvement in the US where they
have been losing market share. This should allow the shares to continue to
advance in the coming months.
The two companies that detracted most from performance were both in the
spirits business. Diageo and Pernod have each suffered from a similar malaise
as they work through the aftermath of the COVID-inspired boom in the sector.
An industry that usually enjoys consistent demand saw a surge in sales during
global lockdowns as consumers filled their cupboards with more premium bottles
of cocktail ingredients than would normally be the case. This boom has
resulted in a mini-bust as consumers and companies have had to work through
excess inventory. The situation has been worsened by the effects of inflation
and fading stimulus on consumption. While the current operating environment
remains tough, we think this will improve in time and investors will once
again be reminded of the excellent competitive advantages these companies
enjoy.
Also weak over this period was Canadian National Railway. We continue to
believe this is an excellent long-term investment for the trust. At a recent
meeting with the CFO, Ghislaine Houle, the company described how they have
suffered from several short-term problems. These included
floods and wildfires, which should be expected, but also labour disputes,
which have been more challenging. They have also seen some weakness in end
markets which would be consistent with a slowing economy. Once resolved we
think the company can return to its long-term growth aspiration of over 10%
earnings per share growth owing to the strong competitive advantages the
business enjoys. This should allow the investment to make a healthy
contribution to the growth in free cashflow in the portfolio which underpins
dividend growth.
Finally, Domino's Pizza was dull as investors fret about the difficult
consumer environment. We think the company is pursuing a sound strategy under
the new CEO, Andrew Rennie, who has had considerable success managing similar
businesses in Europe and Australia. The shares remain very good value and
dividend growth has been consistent.
No major purchases or sales have been made over this period.
Investment outlook
Recent gains in our portfolio are welcome and are in part a function of our
cautious view. Investors have been drawn to the type of dependable,
predictable businesses we favour, as a result of both decent valuations and
concerns about the economic outlook. Given the material and rapid rise in
interest rates globally the resilience of the US economy has been impressive.
COVID distortions which, remarkably, are still working their way through the
global economy, together with the fiscal policy response to that shock, may
explain some of this persistent momentum. To us this means the effects of the
change of the cost of capital may have been delayed but are unlikely to have
been avoided entirely. Indeed, outside of the US, economies have been less
buoyant, notably in Europe.
To this uncertain outlook must be added our observation that on many long-term
measures the US equity market is very fully valued. This not only suggests
that returns from the broader market may be constrained but that many of the
high-quality global income franchises we would love to own in the trust
currently remain too expensive in our judgement. Conversely the businesses we
do own continue generally to be good value and will be resilient should the
economic picture darken.
Two events occurred post the period under review which may affect the
portfolio, at least in the short term, and are worthy of comment. The new UK
Government announced their first budget and the US electorate voted to return
Donald Trump to the White House.
As a global, long term investment portfolio the actions of the UK Government
generally have little bearing on the outlook for our companies and this was no
exception. Although listed in the UK, the companies in which we are invested
are generally global in scope and have relatively limited operations in the
UK. As such the main tax rise contained in the budget, an increase in employer
National Insurance contributions to 15%, which being a tax on domestic
employment rather than global revenues, limits the impact on our companies. We
have two UK focused investments, Admiral Group and Domino's Pizza. In the case
of the former the effect of the tax rise should be able to be passed on
through higher insurance premiums in time. For Domino's Pizza the main burden
of the tax rise will fall on the franchisees rather than the entity in which
we are invested. While this is not ideal it will be manageable.
The recent US election result is potentially more impactful, although even
here the Presidential 4-year term should be compared to our average holding
period for an investment of over 10 years. The emphatic victory by
President-Elect Trump has caused some short-term reaction in global markets.
These have reflected an upbeat attitude in capital markets to the perceived
benefits of a Trump administration, notably around deregulation. Hence, we
have seen strength in areas of the equity market such as banking, technology,
Bitcoin and European defence. The US Dollar has been strong, spreads tight and
equity volatility has declined. Some of our holdings, such as, Paychex, ADP
and IHG have benefited from this.
At the same time less favoured areas have struggled, most obviously renewable
energy and non-US currencies, including Sterling, but most impactfully perhaps
the US Treasury market. The yield on the US 2-year note has climbed from a
recent low of 3.54% to 4.17%, similarly the US 10-year yield has moved from
3.64% to a recent high of 4.45% as the bond market correctly anticipated a
Trump win and the likelihood of greater inflation. The enactment of unfunded
tax cuts, stricter treatment of migrants and especially the imposition of
tariffs will all contribute to this risk. When this is combined with a greater
questioning of the independence of the US Federal Reserve, a more balanced
view than is implied by recent excitement may be wise.
Much is uncertain as rhetoric may not predict policy outcomes. However,
markets have been quick to price in the positive attributes of the Trump
agenda while potentially ignoring the negatives. As regards the portfolio, we
will be monitoring events closely to take advantage of opportunities that
arise.
We therefore have confidence that the Company will be able to continue to
deliver a balance of capital gains and income underpinned by growing free cash
flow from our portfolio of companies. We also remain excited by the prospect
of being able to deploy capital into new ideas, should valuations become more
attractive.
James Harries
4 December 2024
Statement of Directors' responsibilities
A review of the half year and the outlook for the Company can be found in the
Chairman's statement and Manager's review above.
Risk and mitigation
The Company's business model is longstanding and resilient to most of the
short-term uncertainties that it faces, which the Board believes are
effectively mitigated by its internal controls and the oversight of the
Manager, as described in the latest annual report. The principal and emerging
risks and uncertainties are therefore largely longer-term and driven by the
inherent uncertainties of investing in global equity markets. The Board
believes that it is able to respond to these longer-term risks and
uncertainties with effective mitigation so that both the potential impact and
the likelihood of these seriously affecting shareholders' interests are
materially reduced.
Risks are regularly monitored at Board meetings and the Board's planned
mitigation measures are described in the latest annual report. The Board
maintains a risk register and also carries out a risk review as part of its
annual strategy meeting.
A detailed explanation of the principal risks and uncertainties facing the
Company and how the Board manages them can be found in the 2024 annual report,
which can be found on the Company's website https://www.stsplc.co.uk/
(https://www.stsplc.co.uk/) In the view of the Board, these principal risks
and uncertainties at the year end remain. The Board continue to work with the
agents and advisers to the Company to manage these risks. The risks identified
are as applicable to the remaining six months of the year as they were to the
six months under review.
Going concern status
The Company's business activities, together with the factors likely to affect
its future development, performance and position, are continually monitored by
the Board.
The financial position of the Company as at 30 September 2024 is shown on the
unaudited statement of financial position below. The unaudited statement of
cash flow of the Company is set out below.
The Directors have undertaken a rigorous review of the Company's ability to
continue as a going concern. The Company's assets consist primarily of a
diverse portfolio of listed equity shares which, in most circumstances, are
realisable within a very short timescale. The Directors are mindful of the
principal risks disclosed above. They have reviewed revenue forecasts and the
financial position of the Company. They believe that the Company has adequate
financial resources and a suitably liquid investment portfolio to continue its
operational existence for the foreseeable future and for at least one year
from the date of signing of these financial statements. Accordingly, the
Directors consider it appropriate to continue to adopt the going concern basis
in preparing these financial statements.
Related party transactions
During the first six months of the year, no transactions with related parties
have taken place which have materially affected the financial position or
performance of the Company. There have been no material changes in any related
party transaction described in the annual report for the year ended 31 March
2024.
Directors' responsibility statement
The Directors are responsible for preparing the half yearly financial report
in accordance with applicable law and regulations. The Directors confirm that,
to the best of their knowledge:
• the financial statements have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice, in
particular with Financial Reporting Standard 104 "Interim Financial Reporting"
and with the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by the AIC in
July 2022;
• the interim management report includes a fair
review of the information required by Disclosure Guidance and Transparency
Rule 4.2.7R (indication of important events during the first six months of the
financial year and description of principal risks and uncertainties for the
remaining six months of the year); and
• the interim management report includes a fair
review of the information required by Disclosure Guidance and Transparency
Rule 4.2.8R (disclosure of related party transactions and charges therein).
By order of the Board
John Evans,
Chairman
4 December 2024
Portfolio Summary
Portfolio distribution as at 30 September 2024
By region (excluding cash) As at As at
30 September 2024 31 March 2024
% %
North America 47.1 51.5
Europe 47.0 42.9
Asia 5.9 5.6
100.0 100.0
By sector (excluding cash) As at As at
30 September 2024 31 March 2024
% %
Consumer staples 33.8 34.3
Industrials 15.7 17.9
Information technology 15.1 11.7
Healthcare 14.2 14.3
Financials 8.1 8.4
Consumer discretionary 7.2 7.8
Communication services 3.8 4.3
Real estate 2.1 1.3
100.0 100.0
By asset class
(including cash and borrowings) As at As at
30 September 2024 31 March 2024
% %
Equities 104.8 102.9
Cash 0.2 2.0
Borrowings (5.0) (4.9)
100.0 100.0
Ten largest holdings 30 September 2024 30 September 31 March 31 March
2024 2024 2024
Market value % of total Market value % of total
£000 portfolio £000 portfolio
Paychex 16,399 5.3 17,374 5.3
Philip Morris 15,615 5.1 13,179 4.1
British American Tobacco 15,539 5.0 14,458 4.4
Unilever 14,888 4.8 16,261 5.0
CME Group 14,599 4.7 16,245 5.0
Relx 13,948 4.5 14,361 4.4
PepsiCo 13,593 4.4 15,312 4.7
Reckitt Benckiser 13,211 4.3 14,113 4.3
Microsoft 13,133 4.2 15,102 4.7
Novartis 12,945 4.2 12,574 3.9
Unaudited statement of comprehensive income
(Unaudited) (Unaudited)
Six months to Six months to
30 September 2024 30 September 2023
Note Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Net gains/(losses) on investments - 5,932 5,932 - (1,204) (1,204)
Net currency (losses)/gains (26) 649 623 (22) (66) (88)
Income 3 5,810 - 5,810 4,034 - 4,034
Investment management fee (180) (334) (514) (247) (459) (706)
Other expenses (368) - (368) (287) - (287)
Net return before finance costs and taxation 5,236 6,247 11,483 3,478 (1,729) 1,749
Finance costs (183) (339) (522) (83) (153) (236)
Net return on ordinary activities before taxation 5,053 5,908 10,961 3,395 (1,882) 1,513
Taxation 4 (190) - (190) (192) - (192)
Net return attributable to ordinary shareholders 4,863 5,908 10,771 3,203 (1,882) 1,321
Net return per ordinary share 2 3.66p 4.45p 8.11p 3.31p (1.94p) 1.37p
(Audited)
Year to 31 March 2024
Revenue Capital Total
Note £000 £000 £000
Net gains on investments - 5,740 5,740
Net currency (losses)/gains (39) 286 247
Income 3 7,674 - 7,674
Investment management fee (478) (888) (1,366)
Other expenses (595) - (595)
Net return before finance costs and taxation 6,562 5,138 11,700
Finance costs (269) (500) (769)
Net return on ordinary activities before taxation 6,293 4,638 10,931
Taxation 4 (551) - (551)
Net return attributable to ordinary shareholders 5,742 4,638 10,380
Net return per ordinary share 2 6.08p 4.92p 11.00p
The total columns of this statement are the profit and loss accounts of the
Company.
The revenue and capital items are presented in accordance with the Association
of Investment Companies ('AIC') Statement of Recommended Practice ('SORP
2022').
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
Unaudited statement of financial position
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 September 2024 30 September 2023 31 March 2024
Note £000 £000 £000 £000 £000 £000
Fixed assets
Investments at fair value through profit or loss 308,994 219,848 324,666
Current assets
Trade and other receivables 1,596 1,260 60,068
Cash and cash equivalents 695 2,210 6,377
2,291 3,470 66,445
Current liabilities
Bank loans 5 (14,784) (15,855) (15,449)
Trade payables (786) (806) (59,573)
Dividend payable - - (1,736)
Total current liabilities (15,570) (16,661) (76,758)
Net current liabilities (13,279) (13,191) (10,313)
Total net assets 295,715 206,657 314,353
Capital and reserves
Called up share capital 7 1,752 1,223 1,752
Capital redemption reserve 78 78 78
Share premium account 148,245 31,808 148,249
Special distributable reserve 17,660 58,813 45,033
Capital reserve 122,451 110,023 116,543
Revenue reserve 5,529 4,712 2,698
Total shareholders' funds 295,715 206,657 314,353
Net asset value per ordinary share 2 230.82p 220.09p 223.71p
Unaudited statement of changes in equity
For the six months ended 30 September 2024 (Unaudited) Called up share capital Capital redemption reserve Share Special distributable reserve*
£000 £000 premium £000 Capital Revenue
account reserve* reserve* Total
£000 £000 £000 £000
As at 1 April 2024 1,752 78 148,249 45,033 116,543 2,698 314,353
Net return attributable to shareholders** - - - - 5,908 4,863 10,771
Costs in relation to the issue of shares - - (4) - - - (4)
Shares bought back into treasury - - - (27,373) - - (27,373)
Dividends paid - - - - - (2,032) (2,032)
As at 30 September 2024 1,752 78 148,245 17,660 122,451 5,529 295,715
For the six months ended 30 September 2023 (Unaudited) Called up share capital Capital redemption reserve Share Special distributable reserve*
£000 £000 premium £000 Capital Revenue
account reserve* reserve* Total
£000 £000 £000 £000
As at 1 April 2023 1,223 78 31,808 70,924 111,905 3,297 219,235
Net return attributable to shareholders** - - - - (1,882) 3,203 1,321
Shares bought back into treasury - - - (12,111) - - (12,111)
Dividends paid - - - - - (1,788) (1,788)
As at 30 September 2023 1,223 78 31,808 58,813 110,023 4,712 206,657
For the year ended 31 March 2024 Called up share capital Capital redemption reserve Share Special distributable reserve* Capital Revenue Total
(Audited) premium reserve* reserve*
account
£000 £000 £000 £000 £000 £000 £000
As at 1 April 2023 1,223 78 31,808 70,924 111,905 3,297 219,235
Net return attributable to shareholders** - - - - 4,638 5,742 10,380
Shares issued in respect of the transaction with TIGT 529 - 117,223 - - - 117,752
Costs in relation to the issue of shares - - (782) - - - (782)
Shares bought back into treasury - - (25,891) - - (25,891)
-
Dividends paid - - - - - (6,341) (6,341)
As at 31 March 2024 1,752 78 148,249 45,033 116,543 2,698 314,353
*These reserves are distributable with the exception of the unrealised portion
of the capital reserve (£29,444,000; 31 March 2024: £28,322,000; 30
September 2023: £25,529,000), which is non-distributable.
**The Company does not have any other income or expenses that are not included
in the 'Net return attributable to shareholders' as disclosed in the condensed
statement of comprehensive income above, and therefore this is also the 'Total
comprehensive income' for the period.
Unaudited Statement of Cash Flows
(Audited)
Year to
Six months to Six months to
30 September 2024 30 September 2023 31 March 2024
Note £000 £000 £000 £000 £000 £000
Cash flows from operating activities
Net return on ordinary activities before taxation 10,961 1,513 10,931
Adjustments for:
(Gains)/losses on investments (5,932) 1,204 (5,740)
Finance costs 522 236 769
Exchange movement on bank borrowings 6 (665) 60 (346)
Purchases of investments* (75,561) (2,851) (17,217)
Sales of investments* 97,100 16,106 43,263
Dividend income 3 (5,799) (4,029) (7,659)
Other income 3 (11) (5) (15)
Dividend income received 5,321 3,950 7,800
Other income received 12 5 14
Decrease in receivables 20 15 8
Increase/(decrease) in payables 173 (97) (120)
Overseas withholding tax deducted (103) (161) (586)
15,077 14,433 20,171
Net cash flows from operating activities 26,038 15,946 31,102
Cash flows from financing activities
Repurchase of ordinary shares (27,584) (11,786) (25,560)
Issue of ordinary share capital 150 - 6,143
Equity dividends paid from revenue (3,768) (3,231) (6,048)
Interest paid on borrowings (518) (289) (830)
Net cash flows from financing activities (31,720) (15,306) (26,295)
Net (decrease)/increase in cash and cash equivalents (5,682) 640 4,807
Cash and cash equivalents at the start of the period 6,377 1,570 1,570
Cash and cash equivalents at the end of the period 6 695 2,210 6,377
*Receipts from the sale of, and payments to acquire investment securities,
have been classified as components of cash flows from operating activities
because they form part of the company's dealing operations.
Notes to the Financial Statements
Note 1: Accounting policies
For the six months ended 30 September 2024 (and the year ended 31 March 2024),
the Company is applying The Financial Reporting Standard applicable in the UK
and Republic of Ireland ('FRS 102'), which forms part of Generally Accepted
Accounting Practice ('UK GAAP') issued by the Financial Reporting Council
('FRC') in 2015.
These condensed financial statements have been prepared on a going concern
basis in accordance with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, FRS 102 the Financial Reporting Standard
applicable in the UK and Republic of Ireland, FRS 104 Interim Financial
Reporting, and the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" ('SORP') issued by the
AIC in July 2022.
The accounting policies applied for the condensed set of financial statements
are set out in the Company's annual report for the year ended 31 March 2024.
Note 2: Returns and net asset value
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
30 September 2024 30 September 2023 31 March 2024
Returns per share
Revenue return (£000) 4,863 3,203 5,742
Capital return (£000) 5,908 (1,882) 4,638
Total (£000) 10,771 1,321 10,380
Weighted average number of ordinary shares in issue 132,889,765 96,715,825 94,344,039
Revenue return per ordinary share 3.66p 3.31p 6.08p
Capital return per ordinary share 4.45p (1.94p) 4.92p
Total return per ordinary share 8.11p 1.37p 11.00p
Net asset value per share
Net assets attributable to shareholders (£000) 295,715 206,657 314,353
Number of shares in issue at period end 128,115,415 93,898,378 140,517,415
Net asset value per share 230.82p 220.09p 223.71p
Note 3: Income
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
30 September 2024 30 September 2023 31 March 2024
£000 £000 £000
From listed investments
UK - equities 2,853 1,968 2,842
Overseas - equities 2,946 2,061 4,817
5,799 4,029 7,659
Other income
Deposit interest 11 5 15
5,810 4,034 7,674
During the six months to 30 September 2024 the Company did not receive any
special dividends which were treated as capital (30 September 2023 and year to
31 March 2024: £nil).
Note 4: Taxation
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year to
30 September 2024 30 September 2023 31 March 2024
£000 £000 £000
Irrecoverable overseas withholding tax 190 192 551
Note 5: Bank loans
(Audited)
As at As at As at
30 September 2024 30 September 2023 31 March 2024
£000 £000 £000
Bank borrowings repayable within one year 14,784 15,855 15,449
The Company has a £20m multi-currency revolving credit facility with The
Royal Bank of Scotland International Limited, which expires on 19 September
2026. As at 30 September 2024 £14,784,000 was drawn down until 20 December
2024. The amount has been drawn in the same currency split as borrowed at 30
September 2023 and 31 March 2024 - £1,500,000; €4,500,000; and
US$12,750,000.
Interest is payable at the aggregate of the compounded Risk Free Rate ("RFR")
for the relevant currency and loan period, plus a margin of 1.55%.
Note 6: Analysis of net debt
(Audited) Cash flow £000 Exchange movements (Unaudited)
As at £000 As at
31 March 2024 30 September 2024
£000 £000
Cash at bank 6,377 (5,682) - 695
Bank borrowings (15,449) - 665 (14,784)
(9,072) (5,682) 665 (14,089)
Note 7: Called up share capital
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 September 2024 30 September 2023 31 March 2024
No. of shares No. of shares No. of shares
Ordinary shares of 1p
Shares in issue 128,115,415 93,898,378 140,517,415
Held in treasury 47,072,770 28,400,770 34,670,770
175,188,185 122,299,148 175,188,185
During the six months ended 30 September 2024 there were 12,402,000 shares
bought back into treasury at a cost of £27,373,000 (six months ended 30
September 2023: 5,585,197 shares bought back into treasury at a cost of
£12,111,000; year ended 31 March 2024: 11,855,197 shares bought back into
treasury at a cost of £25,891,000).
During the six months ended 30 September 2024 no shares were issued from
treasury (six months ended 30 September 2023: no shares were issued from
treasury; year ended 31 March 2024: no shares were issued from treasury and
52,889,037 new shares were issued for net proceeds of £117,752,000).
No shares were purchased for cancellation or cancelled from treasury in the
current or prior periods.
Note 8: Fair value hierarchy
Under FRS 102, the Company is required to classify fair value measurements
using a fair value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy shall have the following
levels:
- Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- Level 2: other significant observable inputs (including quoted prices
for similar investments, interest rates, prepayments, credit risk, etc); or
- Level 3: significant unobservable input (including the Company's own
assumptions in determining the fair value of investments).
The financial assets measured at fair value through profit and loss are
grouped into the fair value hierarchy as follows:
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 September 2024 30 September 2023 31 March 2024
£000 £000 £000
Financial assets at fair value through profit or loss - Quoted equities
Level 1 308,994 219,848 324,666
Level 2 - - -
Level 3 - - -
308,994 219,848 324,666
There have been no transfers between levels 1, 2, or 3 during the period
(period to 30 September 2023 and year to 31 March 2024: nil).
Note 9: Half-yearly financial report
The financial information contained in this half-yearly financial report does
not constitute statutory accounts as defined in s434 - 6 of the Companies Act
2006. The financial information for the six months ended 30 September 2024 and
30 September 2023 has not been audited or reviewed.
The information for the year ended 31 March 2024 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under s498 (2), (3) or (4) of the Companies Act
2006.
A copy of the half-year report can shortly be downloaded at www.stsplc.co.uk
(http://www.stsplc.co.uk) .
Enquiries:
Juniper Partners Limited
Company Secretary
Email: companysecretary@stsplc.co.uk
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